5 ways energy efficiency makes business sense in residential & commercial real estate

Forty-nine percent of Americans prefer eco-friendly features over luxury items in their home. With a third of the U.S. population living in multifamily housing like apartments these days, the statistic says a lot about the importance real estate owners are placing on retro commissioning their older buildings to save on utilities and give the tenants what they want in a living space.

How do energy efficient upgrades in HVAC, lighting, water management and building envelope effect the bottom line? The proof is in the numbers. Retrofits of multifamily buildings can achieve a savings of 30 percent for natural gas and 15 percent for electricity. The money saved on utilities can be used to avoid raising rent and offset the cost of general operations and maintenance. It simply makes business sense to go green.

Commercial real estate and research institutes like laboratories have seen similar savings from energy efficient upgrades as well. ENERGY STAR properties have reported a 5.9 percent higher net operating income from higher rent, higher occupancy rates or lower operating expenses. In the District of Columbia, LEED-certified office buildings have reported 11 percent lower average electricity usage and 16 percent lower average water usage when compared to non-LEED certified buildings.

The benefits of using an energy expert to pinpoint where you can find savings goes far beyond your average annual utility bill. Statistics show that by moving toward energy efficiency in your buildings:

1. You’ll attract more tenants. Occupancy rates in green certified buildings are 0.9 to 18 percent higher than occupancy rates at conventional buildings.

2. Your resale value will jump. The Department of Energy reported in 2014 that buyers pay 10 to 31 percent more for LEED-certified properties. In Chicago, Continental Plaza Apartments recently became the first large residential property to join the push to accelerate energy efficiency in city limits. With 164 affordable one-bedroom apartments for seniors, the building was originally built as industrial space in 1956. Upgrades to the HVAC, lighting, heating and water conservation efforts resulted in $47,000 in reduced utility costs the first year alone. The property value increased by an estimated $784,000.

3. You’ll reduce greenhouse gas emissions. In September, Brookhaven National Laboratory in New York completed infrastructure upgrades including lighting systems in 18 buildings, a 1,250-ton water chiller and energy management controls. Repaying the loan for the project with the $1.3 million in estimated savings each year, the project is expected to help the lab reduce greenhouse gas reduction by 28 percent by 2020.

4. In a commercial building, you’ll see better employee health and lower corporate health care costs. Poor indoor air quality leads to physical symptoms that result in 150 million missed workdays each year. William J. Fisk of the Indoor Environment Department of the Lawrence Berkeley National Laboratory once reported that improving the indoor environment of a building would reduce allergies and asthma by 8 to 25 percent and prevent 16 to 37 million cases of common cold or influenza each year.

Reducing water leaks and moisture problems, reducing indoor humidity and improving the HVAC system limits the growth of allergens. Improved lighting has also been linked to a 27 percent reduction in headaches at work. For business owners, this means reduced impairment of performance of work, reduced health care costs and reduced sick leave.

5. Your tenants will be more productive. Quieter space, better lighting and improved ventilation has been directly linked to productivity at work and at home. The 2012 report “The Relationship Between Corporate Sustainability and Firm Financial Performance” put this idea to the test, examining investments made by financial institutions in new builds or retrofitting facilities to be more environmentally sustainable.

The study found that out of 449 facilities, the LEED-certified facilities had an annual utilities cost per employee $675.26 lower than the non-certified facilities. The changes also seemed to have an effect on productivity of the staff. The LEED-certified facilities “opened up 458 more consumer deposit accounts and had $3,032,000 more in consumer deposit balance per facility year.”

Alabama residential and commercial buildings have benefitted from conversions toward energy efficiency as well. This summer The Housing Authority of the Birmingham District initiated a $37 million project to improve energy efficiency in the city’s 14 public housing developments. Replacing more than 77,500 inefficient lamps and fixtures and installing high-efficiency water fixtures and ENERGY STAR-rated refrigerators, the job is expected to reduce utility costs by 25 percent over 15 years.

Article originally posted on Al.com.